Weakening USD Could Spark New Gold Rally

Gold prices retreated slightly on Tuesday after hitting three-day highs just below $4,450 earlier in the day. The precious metal is currently trading around $4,400 as of writing, giving bulls a breather before potentially pushing higher.

The latest developments in the US-Iran conflict and its impact on oil prices have contributed to the recent surge in gold prices. However, the US Federal Reserve's (Fed) monetary policy outlook remains a key factor for investors, with markets pricing in just a 30% chance of a rate hike next month.

Strategists at Scotiabank note that the US Dollar has been under pressure due to soft US data reports and a steeper yield curve. They expect the DXY to return to the 97.5-98.5 range, which could further boost gold prices.